Western Union Telegraph Co. v. Hurlburt

• Decision Date: 03 April 1917
• Citation: 163 P. 1170,83 Or. 633
• Parties: WESTERN UNION TELEGRAPH CO. v. HURLBURT, SHERIFF.
• Court: Oregon Supreme Court

163 P. 1170

83 Or. 633

WESTERN UNION TELEGRAPH CO. v. HURLBURT, SHERIFF.

Supreme Court of Oregon

April 3, 1917

Department 2.

Appeal from Circuit Court, Multnomah County; C. U. Gantenbein Judge.

Suit by the Western Union Telegraph Company against T. M. Hurlburt Sheriff and ex officio Tax Collector for Multnomah County. Decree for complainant, and defendant appeals. Decree modified and affirmed in part.

This is a suit by the Western Union Telegraph Company against T. M Hurlburt to enjoin the collection of an alleged tax. The cause, being at issue, was tried, and findings of fact were made to the effect that the plaintiff is a corporation and was organized under the laws of the state of New York as a common carrier to transport messages by electric wires whereby signals are used to represent the letters of the alphabet; that on June 8, 1867, the plaintiff duly accepted the provisions of the act of Congress of July 24, 1866 (U. S. Rev. Stat. § 5263 et seq. [U. S. Comp. St. 1913, § 10072 et seq.]) and pursuant thereto constructed, maintained, and operated upon public roads and highways in every state, territory, and district in the United States and in Portland, Or., telegraph lines for the dispatch of domestic and interstate business; that in each of the years 1906, 1907, 1908, and 1909 the plaintiff's entire tangible property in Multnomah county, Or., was assessed as follows: "Machinery and equipment, $3,900; money, notes, and accounts, $1,500; furniture, $600; lines of wire, $22,395"--amounting to $28,395, and all taxes levied thereon have been paid; that on November 7, 1893, the provisions of ordinance No. 8419 of the city of Portland were accepted by the plaintiff, whereby it was authorized to use the streets, alleys, and public places of that municipality in which to set up its telegraph poles and to string thereon wires necessary for the transaction of its business; that, complying with the provisions of Ordinance No. 11784 of that city, approved September 27, 1900, the plaintiff paid quarterly a license tax of $75; that, nothwithstanding such payments, the assessor of Multnomah county, during each of the years last mentioned, pretended to assess to the plaintiff "all franchise, right, privilege, and grant, as granted by ordinance No. 8419, City of Portland," and arbitrarily placed thereon an annual valuation of $15,000; that the county court of that county annually claimed to levy on such assessment for state, county, and other general purposes taxes which with the penalties thereon are for the year 1906, $403, for 1907, $384.40, for 1908, $435, and for 1909, $359.10, amounting to $1,531.50; that there were attached to the tax rolls warrants, which were directed and delivered to the defendant as sheriff and ex officio tax collector of that county, commanding him to enforce the payment of such sums by levying upon and selling the plaintiff's franchise and other property. As conclusions of law the court further found that, pursuant to the act of Congress of July 24, 1866, the plaintiff had constructed, maintained, and operated its telegraph poles and wires in the city of Portland, that during the years particularly designated the attempted assessment and taxation of the plaintiff's franchise was unconstitutional and void, and that the prayer of the complaint should be granted. A decree having been rendered in accordance with these findings, the defendant appeals.

Samuel H. Pierce, of Portland (Walter H. Evans, Dist. Atty., of Portland, on the brief), for appellant.

Hall S. Lusk, of Portland (Dolph, Mallory, Simon & Gearin, of Portland, on the brief), for respondent.

MOORE J. (after stating the facts as above).

The final determination brought up for review was predicated upon the theory that the tax complained of was attempted to be levied upon the federal franchise granted to the plaintiff, that the exaction, if enforced, would interfere with the right to transact interstate telegraphic business, and for that reason the pecuniary contribution to the public burden so demanded violated the commerce clause of the Constitution of the United States. A "franchise" is a right or privilege granted to a person or corporation by the government or a state either directly or indirectly. 3 Words and Phrases, 2931; Oregon v. Portland Gen. Elec. Co., 52 Or. 502, 526, 95 P. 722, 98 P. 160; Noe v. Mayor, etc., 128 Tenn. 350, 161 S.W. 485, Ann. Cas. 1915C, 241; People ex rel. v. Union Gas, etc., Co., 254 Ill. 395, 98 N.E. 768, Ann. Cas. 1916B, 201. The right thus granted to an artificial person or legal entity to be a corporation is known as its primary franchise. The authority so conferred upon the corporation by some sovereign power to transact a particular business or to do a specified act is designated as its secondary franchise. Joyce, Franchises, § 8; Jones, Telegraph and Telephone Companies, § 45.

The plaintiff's primary franchise, or its right to be a corporation, was granted by the state of New York. A part of its secondary franchise, or the right to construct, maintain, and operate telegraph lines over and along the military or post roads of the United States, was granted by the general government. Subdivision 34 of section 37 of chapter V of the charter of the city of Portland, which clause was in force when Ordinance No. 8419 of that municipality was enacted, empowered its council--

"to allow, authorize, provide for and regulate the erection, maintenance and removal of telegraph * * * poles, wires and cables * * * upon or over the streets, alleys, or public parks and public grounds of said city." Laws Or. 1891, p. 807.

It will thus be noted that by an express delegation of legislative power the right to place in the streets and alleys of Portland, Or., poles and to suspend thereon the necessary telegraph wires to be used to transmit local and interstate messages was granted to the plaintiff by authority of the state of Oregon, and thereby became another secondary special franchise. Portland v. Portland Ry., L. & P. Co., 80 Or. 271, 156 P. 1058. In People ex rel. v. Union Gas, etc., Co., 254 Ill. 395, 98 N.E. 768, Ann. Cas. 1916B, 201, it was ruled that permission given by a city ordinance for the exercise of a corporate franchise within the city was a "license," and not a franchise. In the notes to that case, at [163 P. 1172] page 211 of Ann. Cas. 1916B, in citing authorities maintaining a different view, it is said:

"In many jurisdictions a grant by a municipality to a corporation of the right to use the streets for water, gas, transportation, or other public service purpose has been held to constitute a franchise and not a mere license."

It is believed the excerpt so repeated expresses the correct rule to be applied in such cases, and by invoking the maxim, "qui facit per alium facit per se," it necessarily follows that a permission given by municipal ordinance to a private corporation to exercise some special privilege within the city, pursuant to an express delegation of legislative authority, is a grant by the state whereby the right conferred becomes a franchise, and not a license.

That the assessor of Multnomah county undertook to appraise the secondary special franchise granted by the municipal ordinance as an agent of the state, and not the federal franchise given by the act of Congress, is evidenced by the description of the property set forth in the tax roll as "all franchise, right, privilege, and grant, as granted by Ordinance No. 8419, city of Portland."

The questions to be considered are whether such property when used as a means of transporting local and interstate telegraphic messages can be legally taxed, and, if so, has the burden been properly imposed? Considering these inquiries in inverse order, the statute in force until 1907 contained a clause as follows:

"All taxes for the support of the government of this state shall be assessed on property in equal and ratable proportion, and all property, real and personal, within this state, not expressly exempted therefrom, shall be subject to taxation in the manner provided by law." B. & C. Comp. § 3037.

By an exercise of the initiative power a statute was duly enacted June 4, 1906, and went into effect 21 days thereafter. The act provides:

"That * * * every telegraph company or corporation doing business in this state, shall pay to the state of Oregon a license of two (2) per centum upon the gross receipts of such company or corporation received in this state; which license shall be paid annually by such company or corporation to the treasurer of this state." L. O. L. § 3540.

"That any person or persons, joint stock company, or corporation, wherever organized or incorporated, when engaged in the business of transmitting to, from, through, or in this state, telegraph messages, shall be deemed to be a telegraph company." Id. § 3542.

This act, however, does not provide that the license thus exacted shall be in lieu of any or all other taxes.

The law regulating assessments and taxation was amended February 28, 1907, and the material parts thereof which were in force when the taxes herein were undertaken to be levied read:

"The terms land, real estate, and real property, as used in this act, shall be construed to include the land itself * * * and all rights and privileges thereto belonging or in any wise appertaining; and all franchises and privileges granted by or pursuant to any law of this state, or municipal ordinance or resolution, owned or used by any person or corporation, other than the right to be a corporation." Id. § 3552.

That statute did not go into effect until 1908. Gen. Laws Or. 1907, p. 497....